WASHINGTON — President Barack Obama and leading Democrats have stressed that people who like their employer-sponsored insurance would be able to keep it under a health care overhaul. They haven't emphasized the flip side, however: that people who don't like their coverage might have to keep it.
Under the main Democratic health bills that are being debated in Congress, many people with job-based insurance could find it difficult to impossible to switch to health plans on a new insurance exchange, even if those plans were cheaper or offered better coverage. The restrictions would extend to any government-run plan.
The provisions could change, and there are a few exceptions: Workers would be allowed to buy insurance through the exchange if their job-based coverage gobbled up too much of their incomes or was too skimpy. Also, under the proposal by Democrats in the House of Representatives, people could get insurance through the exchange if they paid their entire premiums, a cost that would be prohibitive for many.
Democratic lawmakers and administration officials say the restrictions are crucial to maintaining a strong employer-based insurance system, which covers 158 million Americans.
Critics argue, however, that the rules run counter to suggestions that a health care overhaul could provide people with a broader choice of insurance options. The restrictions, they say, could be especially unfair to some lower-income workers who are enrolled in costly job-based insurance. Also, they warn that the rules could hurt the proposed public plan by limiting enrollment.
Jonathan Oberlander, an associate professor at the University of North Carolina at Chapel Hill, said, "The rhetoric is that Americans will gain new alternatives, but the reality is that they are putting up firewalls that are going to restrict the access of people with employer-sponsored insurance to the exchange."
One result, he said, is that any public plan would be substantially smaller and less powerful than many backers are envisioning.
James Capretta, a fellow at the Ethics and Public Policy Center, a conservative research center in Washington, said that the government was "essentially telling people you have to take your employer-based plan. . . . I think that's a huge issue."
Most individuals would have to carry insurance or pay fines under the congressional proposals.
Much of the debate is driven by cost. Under the proposals before Congress, people who could go on the exchange include the uninsured, the self-employed and those who aren't offered employer-sponsored coverage. Small businesses also would be allowed to use the exchange.
Most individuals who use the exchange would get government subsidies. Limiting the number of people who could use the exchange, therefore, would hold down the cost.
At a "town hall" meeting on health care July 1, Obama said that any overhaul must "fix what's broken about the system, and that means permanently bringing down costs and giving more choice for everyone."
The exchange, he said, would benefit small businesses and the self-employed, as well as workers at firms that don't provide coverage.
Linda Douglass, the communications director of the White House Office of Health Reform, said that the president "believes that health reform must be built upon our current employer-based system" and the exchange "is there to provide security and affordable options to Americans who don't have those options now."
To prod employers to continue to offer coverage, the bills would require most of them to provide insurance to workers or pay penalties. Employers also would have to meet minimum coverage standards and help workers buy insurance.
As a result, job-based coverage is most likely to be the least expensive option for many people, especially those who don't qualify for government subsidies.
However, those who might get better deals on the exchange would have trouble transferring if they already have employer-sponsored insurance. Under one leading Senate bill, individuals who are offered employer-sponsored coverage could switch to the exchange only if their shares of the premiums exceeded 12.5 percent of their incomes or their plans didn't meet minimum coverage standards.
Under the House Democrats' legislation, workers who are eligible for job-based insurance could go on the exchange only if their costs were more than 11 percent of their incomes.
People who were willing to pay their entire premiums, without subsidies, also could enroll through the exchange under the House bill.
Lawmakers and some health care analysts say that legislation has to create barriers around the exchange to protect the stability of the employer-provided insurance market. Without them, younger and healthier employees, they say, might find cheaper options on the exchange, leaving older and sicker workers in their employers' plans — and driving up their costs.
"We are trying to provide as much choice as possible and trying to honor the president's promise to protect the employer-based system so that if people have coverage they like they'll get to keep it," said Sen. Sheldon Whitehouse, D-R.I., a member of the health committee.
Jacob Hacker, a Yale University professor of political science, said the debate reflected "a delicate dance" in which lawmakers were trying to give some people access to the exchange while preserving the employer-based insurance system.
"To my mind," he added, the House bill "errs too far on the side of making it hard for workers to obtain coverage through the exchange."
Richard Curtis, the president of the Institute for Health Policy Solutions, a nonprofit research group, said that some lower-income workers with employer-sponsored coverage could wind up paying bigger chunks of their incomes for coverage than those with the same incomes who weren't offered job-based insurance. The reason: The latter group would be able to get subsidized coverage through the exchange.
That sends an unfortunate signal, he said, to people who are struggling to pay for employer-sponsored insurance. "So the message to them is, 'Congratulations . . . so now you get to continue paying several times as much as your next-door neighbor who has access to highly subsidized coverage in the exchange,' " he said. "On its face, it's just not fair."
(Jaclyn Schiff of Kaiser Health News contributed to this story.)
(Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy-research organization that isn't affiliated with Kaiser Permanente.)
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